The Australian Competition and Consumer Commission (ACCC) has approved Brookfield and MidOcean’s proposed acquisition of Origin Energy, a move that is expected to help reduce emissions in the country.
The proposed acquisition is composed of two interdependent transactions, which will result in a consortium led by the Brookfield Global Transition Fund owning Origin’s energy markets business, including its electricity generation and retail businesses.
MidOcean will take possession of Origin’s upstream gas interests.
“We are not satisfied that the proposed acquisition would not be likely to substantially lessen competition. However, after a detailed review, we are satisfied that the proposed acquisition is likely to result in public benefits that would outweigh the likely public detriments,” said ACCC Chair Gina Cass-Gottlieb.
“The ACCC considers that the acquisition will likely result in an accelerated roll-out of renewable energy generation, leading to a more rapid reduction in Australia’s greenhouse gas emissions.”
Ms. Cass-Gottlieb said that the ACCC found that it was a fine balance between the public benefit and detriment, and that Brookfield’s decision to acquire Origin Energy—Australia’s fourth largest greenhouse gas emitter—was driven by the commercial incentive to reduce emissions swiftly.
“The ACCC concluded that an accelerated build-out of Origin’s renewable energy generation would be a material benefit to the Australian public,” the ACCC chair said.
“An accelerated build-out by Origin will assist in lowering Australia’s emissions by replacing some fossil fuel generation earlier than would occur without the proposed acquisition. The ACCC considers that a reduction in greenhouse gas emissions is a public benefit of considerable weight.”
The ACCC said it also looked into the potential concern on Brookfield’s 45.4 percent equity stake in Victoria-based transmission company AusNet Services, which has electricity and gas distribution networks.
Ms. Cass-Gottlieb noted the importance of AEMO’s Victorian-specific planning and connection roles in relation to the transmission network, the different ownership of the Brookfield funds putting in the investments, and the role of regulators and minority investors in maintaining healthy competition amid the concerns.
The ACCC also weighed up vertical integration issues between AusNet’s distribution assets and Origin’s retail energy business, and vertical integration with Brookfield’s 50 percent-owned smart meter provider IntelliHub, as well as potential risks of information sharing that may cause an overlap in interests in the LNG export facilities in Queensland through MidOcean.
“Ultimately the ACCC decided that while some of these other issues raised competitive risks, the impacts are less significant,” Ms. Cass-Gottlieb said.
Meanwhile, Origin Energy said that it considers the ACCC’s approval an “important milestone” but noted that the proposed transaction is still pending regulatory approvals from the Foreign Investment Review Board, National Offshore Petroleum Titles Administrator, and other entities.
“The ACCC’s decision marks an important milestone in the proposed acquisition of Origin and the parties will continue to progress with the next steps in the scheme process,” the energy producer said.
Origin Energy’s share price rose 5.3 percent to $9.19 in early trading on Oct. 10 after the ACCC announced its approval.
